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Daimler Provides Sharia-Compliant Loans To Mid East Buyers

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Rashed A. J. Al Fahim, Andreas Ernst, Abdul Jabbar Gargash

Rashed A. J. Al Fahim, Andreas Ernst, Abdul Jabbar Gargash

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When Westerners think of Sharia -- the strict code of Islamic law -- we tend to think of...unpleasantness. Stonings, beheadings: that sort of thing. However, Sharia also covers financial issues, including lending practices. Specifically, Sharia prohibits the charging of interest on loans. That's been bad news for many Western automakers who provide financing, but Daimler recently reached an agreement with with several Middle Eastern companies to offer Sharia-compliant lending in that part of the world. Daimler may not earn interest on those auto loans, but given the Middle East's appetite for Mercedes-Benz rides, it's still an awfully big win. [egmCarTech]

 
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Comments (10)
  1. In a world where car companies are desperate to move their product its interesting that it just occurred to Benz how to capture a 1.5 billion person niche.

  2. This might help them move cars in some of the poorer countries, but Most Saudis who can afford Mercs buy them cash. Also, no interest = price hike (sure you paid no interest, you just paid more for no better a car...)

  3. Well, just as long as none of those Mercedes-Benzes runs with any ethanol in the tank, since that might be a sin for those same observant Muslims:
    http://www.greencarreports.com/blog/1019096_islamic-scholar-suggests-using-ethanol-powered-vehicles-may-be-a-sin

  4. @shy: And equally interesting that it HASN'T occurred to anyone else.

  5. I could see this in Pakistan, India, Indonesia...but does the UAE really need to finance anything? They pay cash for skyscrapers...

  6. @Duh: True, however, there's something to be said for appearing culturally sensitive. Not that the Mercedes brand needs much buffing, but this certainly won't hurt the way that the company is perceived.

  7. So what does it really take to make a loan sharia-compliant...?

  8. @Marquis: Not being an Islamic scholar, I can't say for sure, but I believe not charging interest is the key component. And the late-payment penalties are probably steeper -- MUCH STEEPER.

  9. perhaps next Mercedes will come up with kosher produced gas

  10. No interest on loans? Forget Daimler - how do banks do anything over there?!

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